Retail traders buy the dip on chip stocks - but Robinhood gets burned by the crypto market

This story has corrected to attribute remarks about the Dell family's contributions to Trump accounts to Robinhood CFO Shiv Verma. By Bill Peters

Robinhood CFO says market volatility didn't scare traders away from buying chip stocks 'that they had really done research on'

Robinhood reported quarterly earnings on Tuesday.

Semiconductor stocks have been on a wild ride this year, but that hasn't deterred retail traders from buying them up.

Robinhood Markets (HOOD) CFO Shiv Verma told MarketWatch on Tuesday that even as chip stocks get upended by concerns about artificial-intelligence spending, traders on the online brokerage platform bought the dip during the third quarter.

"There was a lot of volatility for semis in the quarter," he said. "When we saw that, we saw our customers engage, and then use that as buying opportunities for a lot of these names that they had really done research on."

Generally speaking, however, some individual traders making big bets on chips - and adding leverage to the mix - have gotten hit hard recently.

Verma made his remarks shortly before Robinhood's stock fell 4.7% after hours Tuesday, following third-quarter results that missed Wall Street's expectations.

The company's revenue rose 12% from a year earlier to $1.42 billion in the third quarter, as big revenue gains in prediction markets, stocks and options - along with services related to so-called Trump accounts - were offset by a 55% drop in crypto revenue. Robinhood earned 51 cents a share, down 16% from the same quarter last year.

Analysts polled by FactSet expected Robinhood to report third-quarter earnings per share of 56 cents, on revenue of $1.44 billion.

Robinhood and rival trading platforms have been rolling out new services to compete for users. Analysts have zeroed in on the platform's rapidly growing prediction-market business following this summer's World Cup and the start of the NFL season. Verma said election-related bets were picking up steam as the U.S. midterms approach.

Robinhood recently launched AI trading agents as well as stock tokens and a social-trading platform. It also plans to introduce 24/7 trading for some stocks, pending regulatory review.

Meanwhile, the broader market has worried about higher oil prices (CL00) and artificial-intelligence spending. Robinhood has also dealt with slumping crypto markets over much of this year, with the price of bitcoin (BTCUSD) still well off highs reached last summer.

Robinhood's event-contracts revenue, or the money it makes from prediction markets, jumped more than sixfold to $173 million in the third quarter. Options revenue rose 31% to $399 million, and equities revenue came in at $121 million, up 41%.

Net interest revenues fell 9% to $415 million amid lower securities lending and short-term interest rates. The company's operating expenses rose 16% as it dealt with costs related to Trump accounts as well as Rothera, a prediction-market platform it created with Susquehanna International.

Verma, in Robinhood's earnings release, said that net deposits so far in October had surpassed $13 billion - helped by a roughly $6 billion contribution from Dell (DELL) CEO Michael Dell and his wife, Susan Dell, to Trump accounts, the investment accounts rolled out by the government this year for U.S. citizens born between 2025 and 2028. Robinhood is the brokerage and initial trustee for those accounts.

Robinhood's "other revenues" segment jumped 61% to $142 million, lifted by services related to Trump accounts and revenues from Robinhood Gold, the company's subscription service that offers more perks.

Robinhood's stock is down 16.4% so far this year, as of Tuesday's close.

-Bill Peters

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10-27-26 1851ET